unit two Flashcards
ONCE YOU HAVE A $500
EMERGENCY FUND, YOU
SHOULD
SAVE IT UNTIL
YOU HAVE AN EMERGENCY.
THE F I RST ST EP YOU
SHOULD T A K E WHEN
YOU WANT TO MA K E A
L ARGE PURCHASE IS. . .
DECIDE HOW MUCH YOU’LL
NEED TO SAVE AND THE
TIME FRAME YOU WANT TO SAVE IT IN.
THE BEST WAY TO BUILD WEALTH IS
TO START INVESTING EARLY. YOU
SHOULD START SAVING MONEY…
ONCE YOU’RE OUT OF COLLEGE,
LIVING DEBT-FREE, AND HAVE 3-6
MONTHS OF LIVING EXPENSES SAVED.
Habits that are important for building wealth and becoming a millionaire
Consistently investing money and patience to give it time to grow
THE PURPOSE OF AN
EMERGENCY FUND IS TO.
BE ABLE TO COVER AN UNEXPECTED EXPENSE WITH CASH AND PROTECT YOU FROM HAVING TO PILE UP DEBT WHEN SOMETHING GOES WRONG.
The main reason for saving your hard-earned money are
emergencies, large purchases, and wealth building
Once your out of school, have started your career, and have zero debt, your emergency fund should have
3-6 months of living expenses
One of the main reasons we build wealth is
so that we can give to those in need
The time value of money
A certain amount of money today is worth more than the same amount in the future
The amount of interest charged on a debt but not yet collected is called
accrued interest
A legitimate reason to use your emergency fund is
your car battery dying
The five foundations
- save a $500 emergency fund
- get out of debt/loans
- pay cash for your car
- pay cash for college
- build wealth and give
banks and lenders use credit scores to determine
the likelihood that someone is able to repay debt
your greatest tool to build wealth is
your income
components of a fico score
debt payment history
debt level
length of debt history
new debt
debt type
leasing a car is a method of financing where someone
makes monthly payments on but does not own the vehicle
How do credit card companies make most of their profit
Charging interest to customers who only pay part of their monthly debt
car lease agreements come with a stipulation that you must pay a penalty if
you go over the pre established mileage cap
the debt snowball method involves paying off debts from
smallest to largest
the smallest way to buy a car is to
pay for it in cash
what is the best way to avoid falling into debt
only buy things that you can purchase with cash
Credit isn’t a wealth-building tool, it’s a business that makes money for
credit card companies, banks, and lenders
when looking over your credit report, it’s important to make sure
no lines of credit have been opened under your name without your knowledge
The principal is
the total amount of the car loan, plus taxes, and fees
how you spend and give your money
is a reflection of your personal values
an example of an appreciating asset is
a home
what are the three questions to ask yourself before you spend your emergency fund
- is it unexpected
- is it necessary
- is it urgent
